Posted in Budgeting on December 29, 2020
Think it’s time to start getting your finances under control? Then you’re going to need a plan. As annoying as it can be to count every penny and watch every dip in your bank account, you need to have a strategy in place if you’re going to reach your financial goals. That means that it’s time to make a budget – whether you like it or not.
While not a lot of people lover the idea of budgeting, many of us understand that it is one of the best ways to gain control of our money. If you’re nervous about the concept of getting started, don’t panic. Here we’re going to give you some quick tips sure to help any beginner in the budgeting space.
Budgeting isn’t just about tracking how much money you spend; you also need to know what you’re earning too. Having a good idea of exactly how much you make from your job, and any benefits that you might be entitled to will give you a good basis to start figuring out how financially secure you are. Don’t forget to address any side-jobs that you’ve been earning cash from too.
Knowing your income will also help you to make better decisions in the future about how much money you might need to borrow if you’re taking out a loan, and how long it will take to pay off certain debts.
Next, figure out where the money you make is actually going. A lot of people stare at their bank statements each month wondering what happened. Take some time to go through your money and figure out which categories are taking the majority of your income. Are you over-spending on things like going out with friends or entertainment? Is all of your cash going towards massive food bills, even though you throw half of your purchase away each week?
Start writing down all the purchases you make or using an app to track your expenses – even the little ones. This will give you a better understanding of the kind of issues you might have with spending, and what your problem areas look like.
You should also make a note of any regular month to month debts you may be servicing. Perhaps you’re paying off the minimum amount on your credit card or have taken out a bad credit payday loan in the past. Knowing how much you have to pay and when is a great way to maintain and manage a successful budget.
We all have things that we tend to spend a little too much money on. For you it might be that you over-spend on clothes and makeup. For someone else, the problem might be with overspending on takeaway meals when they have plenty of extra food in the freezer. Knowing what your trigger areas are is the first step in handling a better budget. Knowing how to deal with those areas is step two.
Look at what you can do to reduce your chances of spending too much in the areas that you’re most tempted by. Using cash for these points in your budget can be a good option, as it prevents you from just swiping a card and ignoring how much you really spend.
Speaking of finding ways to reduce temptation, it’s also a good idea to look for any areas where you might be making over-spending too easy for yourself. For instance if you have your banking information saved on your favourite shopping websites right now, go and get rid of those details, so you can’t accidentally buy something with a single click after you’ve had a bad day at work.
If you know that you’re low on money right now and your friend invites you to go out shopping with them, let them know your situations so you won’t be tempted to treat yourself to the occasional item just because you happen to be out and about “window shopping”. Making your loved ones aware of your spending problems can make it easier to stick to your guns.
Finally, you use a smartphone for virtually everything in your life, so why not use it for tracking your finances too? There are tons of budgeting apps out there that can help you out with things like alerting you when you get to a certain point in your bank balance or showing you how much cash you have to put into your entertainment category each week.
If nothing else, a banking app should be able to help you to see every penny you spend from your debit card, so you can make more realistic decisions about how to spend going forward. The more informed you are, the better.